After the circulation of leaked documents and rumors, PayPal officially announced on October 21st a new service that supports cryptocurrency, allowing users to buy, hold, and sell directly from their PayPal account.

As if this news wasn’t big enough, PayPal is now exploring the acquisition of BitGo, an institutional digital asset firm. While the details of the deal have not been disclosed, PayPal’s intentions are crystal clear: they know they need to adapt to an evolving financial ecosystem or risk being left behind. With all this going on, this blog will be a detailed speculation on what investors and traders can potentially expect moving forward with this news.

In addition to using PayPal’s platform of over 300 million users, the service will be rolled out to Venmo, a PayPal company with its own user base of 40 million people. Although this news is positive, crypto community members were quick to point out that PayPal was limiting the core features of crypto by not allowing users to access their keys. The significance of this is in the mantra “not your keys, not your crypto.” The outcry was entirely blown over by positive sentiment, something that we expect investors shouldn’t have to worry much about. More important to investors and traders will be forthcoming news regarding who PayPal partners with/acquires, the volume their service brings, and how the service continues to expand and develop.

To address the first factor, investors should monitor who PayPal partners with and if they do so at all. Partnering with or acquiring BitGo signifies how serious PayPal is taking their new position in the crypto space. It also foreshadows an expectation of a large inflow of users to their new service. Investors and traders should keep a close watch on how price reacts to the days leading up to the live launch and the day of. A sharp run-up prior could lead to a sell-off on day one, but steady growth up to the day could lead to a positive initial launch in prices. Any and all released metrics will be worth considering to help predict how future listings will play out, which leads to the last and most important factor, the “PayPal Effect.

The “PayPal Effect” is a phrase we came up with to describe what could happen when PayPal adds new coins to their service. The idea originates from the phrase “Coinbase Effect.” The “Coinbase Effect” earned its name after coins experienced positive parabolic price movement directly after being listed on popular U.S. crypto exchange Coinbase. PayPal’s user base is 10x that of Coinbase’s, and now that we are likely in the early stages of a bull market, sentiment and potential are both high. This could be the perfect storm for a strong effect on the price of coins PayPal decides to add. Keep in mind, they already have committed to supporting Bitcoin, Litecoin, Ethereum, and Bitcoin Cash. There is no telling which coins will be listed first, but history tells us it is likely to be a coin within the top 10 by market cap. The top contenders to be added first outside of Binance Coin and Tether are XRP, Chainlink, Polkadot, and Cardano. If I had to guess, Chainlink and Polkadot would experience the strongest effect from a listing of these four because they are currently the most hyped.

Investors and traders looking to capitalize off of this news should monitor PayPal’s news releases, be cognizant of who they acquire/partner with, analyze any and all metrics released to the public, monitor coin prices of the 4 leading up to the service going live, and place their bets appropriately on what is most likely to be added first if the conditions point to a “PayPal Effect.” Keep in mind everything, above is speculation. We have yet to confirm if PayPal is just a billboard for legitimacy or an institutional force to be reckoned with.

Written By Adam Tarlowski